Federal regulator launches broad review of banks’ sales practices

Wells Fargo
In the wake of the unauthorized accounts scandal at Wells Fargo, federal regulators are investigating sales practices and incentive pay policies at other big banks.
(Ben Margot / Associated Press)

Bank regulators have started to investigate the sales practices and compensation policies of many of the nation’s large and mid-sized banks, something they had promised to do in the wake of the unauthorized accounts scandal at Wells Fargo & Co.

The Office of the Comptroller of the Currency, which oversees most of the nation’s big banks, earlier this month started sending letters to banks requesting information about their sales practices, Deputy Comptroller Bryan Hubbard said Tuesday.

The OCC is reviewing sales practices related to consumer, small business and wealth-management accounts and services tied to employee incentive pay, he said. The agency is requesting information from most banks it supervises that have at least $10 billion in assets.

There are 62 banks that are supervised by the OCC and meet that minimum, according to the Federal Deposit Insurance Corp.


The review had been expected since the head of the OCC promised to take such action at a Sept. 20 hearing that the Senate Banking Committee held on Wells Fargo. Comptroller of the Currency Thomas Curry said his agency would assess whether banks have controls in place that would prevent the kind of practices uncovered at the San Francisco bank.

The OCC, along with the L.A. city attorney’s office and the Consumer Financial Protection Bureau, last month reached a $185-million settlement with Wells Fargo after finding that workers at the bank created as many as 2 million accounts for customers without their authorization, all in the name of meeting unrealistic sales goals and trying to either earn additional pay or simply keep their jobs.

In some cases, customers paid fees on accounts they never asked for. In others, bank workers issued credit cards to customers without their authorization, potentially affecting those customers’ credit scores.

Most banks use a combination of sales goals and incentive pay to encourage workers to offer accounts and services to customers. In reviewing those practices, regulators will likely focus on how goals and incentives are structured, and whether there are ways for workers to game sales systems in ways that harm customers.


The Los Angeles Times reported earlier this month that the sales system at Wells Fargo may have been easier to game than the systems at other banks.

For instance, former Wells Fargo workers said that they would get sales credit for opening a credit card account for a customer, regardless of whether the customer ever used the account. At Bank of America, workers only get credit if a customer uses the card.

Wells Fargo also offered sales credit for employees who opened more than one of the same type of account — two savings or checking accounts, for instance — for the same customer. At JPMorgan Chase, workers would not get credit for such accounts.

Hubbard would not disclose the specific information the OCC has requested from banks and would not say how long the agency’s review of sales practices might take.

He said the agency is coordinating with other bank regulators, specifically the Federal Reserve, the CFPB and the FDIC.

Twitter: @jrkoren

Get our weekly Business newsletter

A look back, and ahead, at the latest California business news.

You may occasionally receive promotional content from the Los Angeles Times.